US Stocks Open Higher, Boosted By Jobs Data, GDP Revision

KristinaPeterson

NEW YORK (MarketWatch) -- U.S. stocks opened higher on the final day of the best September in 71 years, boosted by encouraging jobs data and a slightly higher revision of second-quarter U.S. growth.

The Dow Jones Industrial Average added 55 points, or 0.5%, to 10890 on Thursday, the final day of the third quarter. The Dow has climbed nearly 11% this quarter, buoyed by the strongest September rally since 1939. This month alone, the measure has surged 8.8%, with monthly gains in all of its 30 components, while the Standard & Poor's 500-share index has jumped 9.7% as fears over a double-dip recession eased.

September's surge brought the benchmark indexes into the black for the year. The Dow is now up 4.5% year-to-date. Of the previous 68 years when the measure was up after three quarters, it continued to rise 71% of the time and ended the year in the black 94% of those years.

On Thursday, all but one of the Dow's components climbed. Only Caterpillar edged down 0.4%, though the company has been the measure's strongest performer in the third quarter, climbing 33%.

The Nasdaq Composite recently gained 0.7% to 2392. The S&P 500 climbed 1% to 1156, led by its energy sector, as crude-oil prices rose above $79 a barrel.

Encouraging U.S. jobs data helped boost the sectors most closely tied to the U.S. economy. Industrial and consumer-discretionary sectors rose after the number of U.S. workers filing new claims for jobless benefits dropped more than expected last week, falling by 16,000 to 453,000 in the week ended Sept. 25, the Labor Department said Thursday. Economists polled by Dow Jones Newswires had predicted new claims would fall by only 5,000.

Separately, the Commerce Department said in its third estimate that gross domestic product grew at a 1.7% annual rate April through June. Economists surveyed by Dow Jones Newswires expected the final estimate would show no change from the second estimate a month ago, of 1.6% growth.

However, European sovereign debt concerns re-emerged after Moody's Investors Service downgraded Spain's credit rating and the Central Bank of Ireland outlined the costs of rescuing its troubled banking sector, including the nationalized Anglo Irish Bank. Shares of Allied Irish Banks, which will need to raise an additional EUR3 billion ($4.1 billion), fell 18%.

More encouragingly, Germany said the number of its unemployed declined in September. The Stoxx 600 index was up 0.5% in recent trading.

Shares of American International Group rose 6.3% after the company explained how it will repay the U.S. government for the massive bailout it received during the financial crisis. The Federal Reserve Bank of New York will be fully repaid, while U.S. Treasury holdings will be exchanged for AIG common stock, the insurer said. Separately, AIG announced an agreement to sell two units in Japan to Prudential Financial in a deal valued at $4.8 billion.

The U.S. dollar weakened against both the euro and the yen. Demand for Treasurys declined, pushing yield on the 10-year note up to 2.53%. Gold futures continued to climb.

Later in the day, Federal Reserve Chairman Ben Bernanke will testify on financial regulatory overhaul in Washington.

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